Federal EV Tax Credits Expire: What's Next for US Electric Vehicle Market?

The Download: RIP EV Tax Credits, and OpenAI's New Valuation Yesterday marked the end of federal electric vehicle (EV) tax credits in the US, a move that has left many wondering what's next for the country's EV market. The credits, which provided up to $7,500 toward the purchase of a new EV, were a major factor in cutting the upfront costs of EVs and driving demand. The demise of the tax credits comes at a time when battery-electric vehicles still make up a small percentage of new vehicle sales in the country. According to data from the US Department of Energy, EVs accounted for just 3% of all new vehicle sales in 2022. "This is a significant blow to the EV market," said Casey Crownhart, author of The Spark, MIT Technology Review's weekly climate newsletter. "The tax credits were a key factor in making EVs more affordable and accessible to consumers." The tax credits were expanded and extended as part of the 2022 Inflation Reduction Act, which aimed to promote the adoption of clean energy technologies. However, their expiration has left many wondering what will happen next. One potential solution is the development of more affordable EV options. Ford recently announced plans for a $30,000 electric pickup truck, which could be just what the market needs to boost demand. "The US could really use an affordable electric truck," said Crownhart. "If companies like Ford can produce vehicles at this price point, it could help drive adoption and make EVs more mainstream." Meanwhile, OpenAI's valuation has reached a new milestone. The AI startup, which is behind the popular language model ChatGPT, has reportedly raised $10 billion in funding, valuing the company at over $90 billion. This latest development marks a significant increase from OpenAI's previous valuation of around $20 billion. The funding will be used to further develop the company's AI technology and expand its reach into new markets. As the EV market navigates this new landscape without tax credits, one thing is clear: innovation will be key to driving demand and making EVs more accessible to consumers. Background: The federal EV tax credits were first introduced in 2007 as part of the Energy Policy Act. They were expanded and extended in 2022 as part of the Inflation Reduction Act, which aimed to promote the adoption of clean energy technologies. Additional Perspectives: Some experts argue that the expiration of the tax credits will have a limited impact on the EV market, citing the growing demand for EVs and the increasing availability of affordable options. Others warn that the loss of the tax credits could slow down the transition to electric vehicles and hinder efforts to reduce greenhouse gas emissions. Current Status: The US EV market is expected to continue growing, albeit at a slower pace without the tax credits. Automakers are likely to focus on developing more affordable EV options and increasing production capacity to meet demand. Next Developments: As the EV market adapts to this new landscape, one thing is clear: innovation will be key to driving demand and making EVs more accessible to consumers. Companies like Ford are already working on developing more affordable EV options, and OpenAI's latest funding round is expected to drive further innovation in AI technology. *Reporting by Technologyreview.*